BISMARCK, N.D. (AP), Dec 13 _ Drilling in North Dakota's oil patch is expected to be slashed by at least a third next year, industry officials say, citing slipping crude prices and a slumping U.S. economy.

North Dakota sweet crude was fetching only about $30 a barrel last week, a five-year low after a record $136.29 in July.

Still, there's not a whisper of bust, said Lynn Helms, director of the state Department of Mineral Resources.

``We may see rig counts drop, and we may see production decline slightly, but we're not talking bust or collapse as we've seen in the past,'' Helms said.

Record oil production _ some 200,000 barrels a day at present _ has propelled the state from eighth to fifth among oil producing states. Production this year is pegged at 53.6 million barrels, or about 1 million more barrels than the record set in 1984. But industry officials say the zenith likely has been reached.

``Can we expect to maintain at that level? I don't believe so,'' said Ron Ness, president of the North Dakota Petroleum Council, whose group represents about 160 companies.

Ness said 2009 drilling budgets ``are certainly going to be down a third, more in some cases less in others.''

Oil companies are tied to scores of valuable leases that require production to retain the right to drill. Production usually is required within three to five years, or up to 10 years on federal land. Helms said the use-it-or-lose-it leases _ and the likelihood of oil that they represent _ will temper a bust cycle in the state.

``When prices fell like this in the past, it brought bust times,'' Helms said. ``It's very different this time, with hundreds of thousands of acres under lease. It helps you weather these things much better.''

Harold Hamm, chairman of Enid, Okla.-based Continental Resources Inc., said his company is the largest leaseholder in the Bakken shale formation, with more than 600,000 acres in North Dakota and Montana.

The company has about 10 rigs working at present in North Dakota's oil patch and intends to keep them drilling, he said.

``Folks out there know we do what we say ... we will cover lease acres with drilling,'' said Hamm, who ranks as the 42nd-richest American, with a net worth of $7 billion, by Forbes magazine estimates.

His company plans to cut its rig count in other areas, however. Continental announced its drilling budget would be cut from $663 million this year to $541 million in 2009.

``Naturally, with commodity prices where they're at, it changes our plans,'' Hamm said. ``It's not a game changer, but it is a plan changer, at least for the short term.''

Eighty-eight oil rigs were operating in North Dakota last week. Helms said rig activity could slide to about 65 rigs if oil remains at around $40 a barrel.

Each active oil rig represents about 40 direct jobs and 80 indirect jobs in the state.

Helms said Wall Street financing for North Dakota oil patch operations was abundant just a few months ago, but the interest has cooled.

``Venture capitalists and foreign money are not beating our door down anymore looking to get in,'' Helms said. ``The main Bakken drillers are internally financed.''

The swing of more than $100 in oil prices in the past few months led to a roller coaster climate that has made planning difficult for oil companies.

Oil prices of $50 to $70 a barrel would keep the investment climate strong in North Dakota, and wells working in the state's oil patch, industry officials say.

North Dakota had 4,149 wells operating at the end of October, compared with 3,831 the same time last year, Helms said. Sixteen of North Dakota's 53 counties are producing oil, he said.

The state reached its pipeline, rail and refining capacity in October, Helms said. Prices for North Dakota crude generally lag about 10 percent behind other oil on the New York Mercantile Exchange, because of the increased distances of getting it to market, he said.

North Dakota sweet crude is of such high quality, industry officials say, that a diesel engine can run on it straight from the well.